Cash in on a buoyant real estate cycle

14 September 2017

Cash in on a buoyant real estate cycle

At this time of year, it is good to reflect on the sales year-to-date. In reviewing the statistics produced by the Cayman Islands Real Estate Brokers Association (CIREBA) to help formulate my opinions on the real estate market going forward. In this September update, as the Cayman Islands prepares itself for the busy winter high season ahead, I thought it was about time to see where sales have gone, year on year to date, for the previous five years. This should give us a good perspective for the year ahead looking at the trend.

From January 1st – August 31st, 2017, there were a total of 462 property sales in the Cayman Islands. This figure has steadily tracked in an upwards trajectory over the past five years. In 2013 for the same period the figure was 302 sales, 2014 it was 414 sales, 2015 there were a total of 476 sales and up to August 2016 there were 480.

Seven Mile Beach peaked?

This underlines my opinion discussed in several of my recent market updates of this year, all speaking to an increasingly buoyant market. Nowhere has that market seen more buoyancy than the Seven Mile Beach corridor condominium market. In 2013 there were 38 such sales (January 1st – August 31st, 2013), in 2014 there were 82, 2015 saw 81, 2016 saw 54 and this year 2017 to August 31st there has been 85. The question here is what happened in 2016 as it is out of the trend. This was due to the fact that the last development, Watercolours had completely sold out, and the pre-sales of the redevelopment of Margaritaville had not actually been recorded in CIREBA, as they had not closed at this time.

This year, January to August, we have still seen an impressive amount of sales in the Seven Mile Beach corridor condo sector, which is primarily Margaritaville, but I predict these figures will start to dwindle as we head into 2018. This is for the simple reason that inventory is at an all-time low figure. Investors are therefore happy to see the value of their properties in this location increasing on a regular basis. But keep in mind that a return on investment must have a sale to be realized. What looks good on paper needs to be backed up by action if investors want to have a return, otherwise it’s all perceived. My advice to property owners who might be sitting on multiple units or who might be interested in generating a return, is that they ought to think about selling while we ride this buoyant property tide and take advantage of this time. We have seen this at a few different properties so far, this year. As an example, Plantana to mention one. Ultimately, you will not see a return on your investment until a sale is realized.

Indicators suggest that the US economy, so vital for the success of our own real estate market, might show some effects in 2018 and for this reason, we ought to take note of the rising prices of Seven Mile Beach condos that potentially may reach a peak at some point. Never-the-less, if the US economy does slow down, I am still convinced that other markets, such as those in Europe, will help to bolster our real estate market for many reasons.

I don’t see Cayman as impacted by the US and other countries economic instability. I see this as a benefit to Caymans market, and the instability whether economical or from the potential of unrest around the world, is the primary reason that Cayman is so attractive. As a small market, we need limited amount of activity to have a buoyant market. This is complimented by the fact that investors are looking for other options, and do not want to keep all their eggs in one basket. To this end, Cayman is a great investment option due to its small economy. Cayman has become increasingly desirable over the past 5 years, as more and more investors are looking to have a stable working (rental) asset.

Cayman remains an excellent location in which to make an investment in real estate no matter where you are from as a buyer. Our strengths lie in our political stability, our firm links to Great Britain, our first world infrastructure, safety, security and excellent amenities, restaurants, shopping and attractions that we can offer prospective buyers. All that and of course our world class beaches and almost year round perfect weather!